1. business and industrial

FP Solutions Manual
Table of Contents
Introduction to FP Solutions
3
Working in FP Solutions............................................................................ 3
Navigating in the FP Solutions interface .................................................... 4
Using the Menubar ................................................................................... 4
Using the Toolbar...................................................................................... 5
Working in the Document View of Client Plans.......................................... 7
Working in the Variables and Spreadsheet Views of the Client Plans......... 7
Finding out More Information ................................................................... 8
Using the Sample Files.............................................................................. 8
Using the Manual and the On-line Help. ................................................... 9
The FP Solutions Workflow ..................................................................... 10
Managing Client Files
11
What is Stored in Client Information Files? ............................................. 11
Working with the Fact Finder.................................................................. 11
Creating new Client Files ........................................................................ 12
Opening Existing Client Files .................................................................. 13
Working with Scenarios .......................................................................... 13
Saving Client Files .................................................................................. 14
Creating a Custom Default File ............................................................... 15
Default Settings to Review....................................................................... 15
Importing Data from Other Programs ...................................................... 17
Working With Client Data
20
Using the FP Assistant ............................................................................ 20
Creating a new Financial Plan................................................................. 21
Using the Concept, Single Needs or Total Needs Plans for Pre-determined
Planning ................................................................................................. 22
Using the Fact-Finding Interview............................................................. 23
Entering Business Information................................................................ 24
Reviewing and Editing Client Data .......................................................... 26
Updating a client data module ................................................................ 26
Adding a Module ..................................................................................... 26
Working with Financial Plans
28
Viewing a Financial Plan ......................................................................... 28
Using the Optimize Cash Flow tool.......................................................... 28
Using the Solve Tool................................................................................ 33
Applying a Common Planning Strategy.................................................... 34
Using a Planning Concept ....................................................................... 35
Setting up, Previewing and Printing Reports............................................ 36
Printing to an Excel spreadsheet ............................................................. 37
Reviewing Assumptions........................................................................... 37
Working with Simulations
39
Using Monte Carlo Simulations............................................................... 39
Using Historical Simulations................................................................... 39
Using Variance Simulations .................................................................... 39
Running Simulations .............................................................................. 40
1
Settings for Simulations.......................................................................... 42
Viewing the Simulation Results............................................................... 44
Sorting Results ....................................................................................... 44
Saving Results ........................................................................................ 45
Setting the chart range ........................................................................... 45
Working with Investments
46
Setting Return Assumptions for Investments .......................................... 46
Setting Management Expense Ratios....................................................... 47
Creating Investment Profiles ................................................................... 48
Developing Portfolios
50
Creating an Investment Database ........................................................... 50
Working with Investment Databases ....................................................... 51
Developing an Investment Portfolio ......................................................... 52
Selecting Investments in a Logical Sequence ........................................... 53
Editing Investments in the Portfolio ........................................................ 54
Using Disclaimers ................................................................................... 55
Creating Custom Investments ................................................................. 55
Working with Investment Variables ......................................................... 56
Exporting Portfolios................................................................................. 56
2
Introduction to FP Solutions
FP Solutions is designed to meet your financial planning needs and to simplify
the gathering and analysis of your clients’ financial information. Developed to
meet a wide range of financial planning needs, there are 4 levels of program
access to choose from:
•
FP Solutions Basic—the essential, everyday financial planning tool for
single needs planning.
•
FP Solutions Plus—the tool for total needs planning
•
FP Solutions Advanced—a financial modeling tool cash flow-based with
planning strategies and recommendations
•
FP Solutions Business—a sophisticated tool that includes all aspects of
business planning
Each successive level builds on the features of the previous level, and all levels
were designed to meet your planning needs, from basic needs at point-of-sale,
to fully integrated, comprehensive planning.
Working in FP Solutions
FP Solutions has been designed to be easy to navigate through and to work in.
Using FP Solutions you can develop financial plans ranging from the most basic
to the very complex. All you have to do is open the related modules—Excel
worksheets that use the FP Solutions interface—to expand the scope of the
plan. FP Solutions has been designed to be simple to use, with many tools to
help guide you through gathering information and creating a plan.
3
Navigating in the FP Solutions interface
The FP Solutions user interface has been designed so that you can easily access
tasks, enter information, and work with that information.
The Main Workspace
You can access most of the FP Solutions tasks from the Main workspace.
The work space includes:
•
Task buttons to open
commonly used tasks
•
A Menubar to access all
FP Solutions functions
•
A Toolbar to quickly
access common tasks
Using the Task buttons
The Task buttons make it easy to start several common activates in FP
Solutions—just click the Task button for the activity.
Using the Menubar
The Menubar is located across the
top of the Main workspace, and lists
the features in FP Solutions. The
Menubar is always available, so you
can easily move to other activities
within the program.
You can use the File menu to access
common features like Save, Import,
and Print.
The Data menu opens the detailed
Data Entry dialog box for different
modules in the client plan.
The Goto menu opens the different
modules in the client plan and
displays the documents in that
module.
4
The Tools menu opens:
•
A Calculator for quick calculations
•
Change Zoom to change the text and
graphic sizes on the screen
•
Set Display Range to defines the
number of years displayed in the plan
•
File Save Reminder to set how often
the program reminds you to save your
data
•
User Information to update your
information
•
Update Licence to update the licence information for FP Solutions
•
Simulation Tool to access the Monte Carlo and Variance simulation utility
•
Mutual Fund Data Import to import mutual fund data from other
programs namely Paltrak, Globe Hysales, Fund Profiler and BellCharts
•
Excel Menu to change the menubar to the Excel menubar. To switch back
to the FP Solutions menu bar, select the FP Solutions menu from the
Excel Tools menu
The Help Menu opens:
•
The on-line Help for FP Solutions
•
The FP Assistant to guide you through
collecting data. See The FP Solutions Assistant
for more information
•
Common Planning Strategies opens the
common planning strategies dialog box
•
Version Information
•
Information About FP Solutions
Using the Toolbar
The FP Solutions toolbar is located under the Menubar across the top of the
Main workspace, and helps you navigate through FP Solutions and perform
frequent tasks.
The buttons on the Toolbar are:
•
New—to start a new client plan
•
Open file—to open an existing file
•
Save—to save the current plan
•
Scenarios—opens the Scenarios dialog box so you can add
or change the scenarios for the current plan
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6
•
Print Report—lets you select the documents to print as part
of the plan
•
Print Document—prints a complete report for the module
that is currently being viewed
•
Print Preview—to display each page as it will look when it is
printed in the module that is currently being viewed
•
Review Client Data—open the Fact Finding Interview dialog
box to edit client information
•
Data Entry—opens the Fact Finding Interview dialog box for
the module that is currently being viewed.
•
Assumptions—opens the Assumptions dialog box so you can
edit the return and earning assumptions applied to the plan
•
Tax Rates—opens the Tax Rates dialog box so you can edit
the tax rates applied to the plan
•
Optimize—opens the Cash Flow dialog box so you can edit
the optimization settings for the plan and run an
optimization across the whole plan
•
Financial Calculator—opens the financial calculator for
quick calculations
•
Solve—to solve for deposit and withdrawals in the module
that is currently being viewed
•
Client—to switch to the same module for the client’s spouse.
•
Home—to return to the Main workspace
•
Back—to go back one planning module
•
Next—to go forward one planning module
•
View—to view the various modules making up the financial
plan
•
Calc—to recalculate plan projections after you’ve changed
data
•
Exit—to exit the program
Working in the Document View of Client Plans
P Solutions comes with a full set of preformatted client documents. The
documents appear on screen the same as they do when printed for a client.
Click the Summary or Ledger tabs at the bottom of the window to view the
documents.
You can add information to
these documents using the
Fact-Finding Interview dialog
box, or you can add and edit
information directly to the
document you are working on.
When you click Calc button on
the Toolbar, the document’s
graphs and ledgers adjust to
reflect the changes you entered.
To view the whole document as
it will appear when it is printed,
click the Print Preview button
on the Toolbar.
Working in the Variables and Spreadsheet Views of
the Client Plans
FP Solutions also displays
client information in a
spreadsheet format. Click the
Variables tab at the bottom of
the window to view the
Variables spreadsheet. The
Variables page allows you to
enter additional data for each
year of a plan.
The buttons on the top left allow you to:
•
Return to the Main workspace
•
Recalculate the data
•
Get help for this section
•
Switch to the spouse’s variables page
•
Edit the data within a dialog box
7
The buttons across the top of the data column open the Custom Trends dialog
box to allow you to enter streams of data by entering the starting and ending
ages, amount and index rate.
FP Solutions also displays
client information in a
spreadsheet format. Click
the Spreadsheet tab at the
bottom of the window to
view the Spreadsheet page.
You cannot edit the
information on this page, it
is provided as an audit trail
for all calculations within a
module. This is also were
you would link any custom
documents to that you may
create..
Many Variables and Spreadsheet pages contain several columns which may go
beyond the edge of the window. To navigate to these columns use the vertical
scroll bar at the right side of the window, and the horizontal scroll button in the
bottom right of the window or, on the Variables page, use the drop-down menu.
Finding out More Information
When you are gathering client information, you can right-click on any field to
get more information about the type of data you should enter in that field.
Using the Sample Files
The sample files are collections of sample client data so you can practice using
the many aspects of the FP Solutions program. To open a sample file, click the
Open a Financial Plan Task button and select a sample file.
The sample files available are:
•
Sample_Basic
•
Sample_Plus
•
Sample_Advanced
•
Sample_Business
The files are an example of the type of data you can enter at each level. You
can use the file to view data and also create samples of the printouts
8
Using the Manual and the On-line Help.
The manual and the on-line help have been designed to help you complete your
work in FP Solutions, and organized generally in the order that you will use FP
Solutions. The manual has a table of contents listing the topic headings and an
index that lists words and phrases.
The on-line help has a table of contents and you can also use the index and the
search feature to find specific information. To use the on-line help, from the
Tools menu, click FP Solutions Help. Then you can click on:
•
the Contents tab, and click on items in the table of contest to view more
information about that topic.
•
the Index tab to search for words or phrases
•
the Search tab to search for words within the help
There are a few typographical conventions used in this on-line help guide:
•
Bullet lists are used to provide information
1. Numbered lists are used for procedures
Items in bold blue indicate the name of an item or button to click in a
procedure. Items in italics indicate the title of a window, pane, or field.
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The FP Solutions Workflow
FP Solutions offers you the flexibility to develop your clients’ financial plans a
number of different ways. You can use FP Assistant to guide you through the
entire process of developing a plan; you can use one of the FP Solutions predetermined plans to simplify the process of gathering information and creating
a plan; or you can gather information and create a plan using only the modules
you require.
In any of these cases, the following process offers the most effective workflow to
develop a financial plan.
Step One—Enter the basic data
•
Enter the client’s financial information, using the Fact-Finding Interview,
a pre-determined plan, or by selecting the specific modules you require.
Step Two—Review the data
•
Review the data to ensure it is correct and make any necessary changes.
•
Save this file. This gives you a basic data set to use as a starting point for
creating scenarios showing financial projections.
Step Three—Create a "Current Situation" scenarios
•
Beginning with the basic data, create a "Current Situation" scenario
•
Add deposits and withdrawals, solve for retirement income, to create an
optimal plan for the client’s current financial situation.
•
Review the plan modules, taking note of the planning shortfalls and
potential problems in the plan’s Notes section.
Step Four—Create one or more "Recommended" scenarios as needed
10
•
Beginning with the "Current Situation" data, create a "Recommended"
scenario
•
Adjust deposits and withdrawals, asset allocation and implement any
other recommendations.
•
Complete the "Problems" "Recommendations" and "Action Plan"
documents in the personal information module.
•
Print the completed plan.
Managing Client Files
Managing your files involves creating and saving client information as well as
creating default files containing customized default values and settings.
A Client folder is created when you install FP Solutions and this is the default
location for storing client information files. You can choose to store the
information in another file, but do not store client files in the same directory as
the FP Solutions program files.
What is Stored in Client Information Files?
Client information files contain all the client data and assumptions you have
entered for the client, including the basic data and any scenarios.
It does NOT contain any of the Federal or Provincial tax settings, as this
information is global to allow for easy updating of plans in the future.
Working with the Fact Finder
FP Solutions’ Fact Finder is another way to collect information from your
clients. It is an Excel workbook that you or your clients can complete with their
financial information. When data is entered directly into the fact finder, it also
creates a financial snapshot, containing a simple net worth statement,
retirement projection and survivor needs.
; Note: Do not run the Fact Finder file at the same time that you are
running the FP Solutions program.
About the Fact Finder
You can print the Fact Finder and complete it, or you can e-mail a copy of the
fact finder file to your clients, so that they can enter information into the file,
save it and send it back to you. Then you can enter the information into you
client’s file, or, if the document was completed electronically, import the
information into FP Solutions.
To print a Fact Finder file
1. Ensure the FP Solutions is not running.
2. From the Windows Start menu, choose the Programs sub-menu, then FP
Solutions and select either Fact Finder Personal or Fact Finder
Business.
3. From the File menu, choose Print to print the file.
To copy a Fact Finder file
1. Ensure the FP Solutions is not running.
2. From the Windows Start menu, choose the Programs sub-menu, then FP
Solutions and select either Fact Finder Personal or Fact Finder
Business.
FP Solutions opens the Fact Finder.
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3. From the File menu, choose Save As, enter a new name for the file and
click Save.
FP Solutions saves a copy of the file under the new name
; Note: If you use your client’s name in the new file name, it will be easier
to find the file. You should also add the words "Fact Finder" to the file
name to easily distinguish it from a client data file.
4. Enter your client’s financial information in the copy, or email the copy of
the file to your client. There are notes within the file to help you collect
the correct information.
To import a Fact Finder file into FP Solutions
If the Fact Finder has been completed electronically, you can import the
information into FP Solutions to create a client data file.
1. Open FP Solutions.
2. From the Client Profile wizard, choose Open a previously completed FP
Solutions Fact Finder and click OK. Select the Fact Finder file you want
to open, and click Open.
FP Solutions opens the file and displays the Review Client Data dialog
box.
Creating new Client Files
When you launch FP Solutions, the program opens the Client Profile wizard.
You can start to create a new file from here, or click the Create a New
Financial Plan Task button to open the wizard.
To create a new client file
1. From the Client Profile wizard, choose Create a new plan and select a
type of plan to create, determine whether the spouse’s information is to
be included in the plan and click Next>>.
2. Select a default file to use, or click Select to browse to a custom default
file you have created and stored in another directory. Click Finish.
FP Solutions opens the modules associated with the plan you chose and initializes the
client plan.
3. Follow Working with Financial Plans on pg. 28
What’s next?
Once you have created a new client file, you can start to add client information.
When you have finished adding the information, you can add scenarios and run
simulations.
For more information, see:
12
•
Working with Scenarios on pg. 13
•
Working with Simulations on pg. 39
•
Creating Investment Profiles on pg. 52
Opening Existing Client Files
You can open an existing file from the Client Profile wizard or click the Open a
Financial Plan Task button.
To open a client file
1. From the Client Profile wizard, choose Open a previously saved FP
Solutions client file or click the Open a Financial Plan Task button.
2. Select the client file you wish to work with and click Open.
FP Solutions opens the client file and the Scenarios dialog box, showing the active
scenario.
3. To work with a different scenario, select the scenario and click Load. If
you want to create a new scenario, click Add and enter a name for the
new scenario. Then, select a scenario to apply to the client file and click
Load. Click Close to work with the current scenario See Working with
Financial Plans on pg. 28 for more information.
FP Solutions opens the client file to the start of the Fact Finding interview.
What’s next?
Once you have opened a client file, you can start to edit client information, add
scenarios and run simulations on the information.
For more information, see:
•
Working with Scenarios on pg. 13
•
Working with Simulations on pg. 39
•
Portfolios on pg. 50
Working with Scenarios
Scenarios are versions of your client’s financial plan with different assumptions.
By creating a scenario for various recommendations or what-ifs, you keep the
basic data unchanged. If the results are not what were anticipated, you can
remove the entire scenario and start over again by creating a new scenario from
the original basic data. You can create up to 10 different scenarios within a
single client file.
About scenarios
13
A scenario is basically a copy of the
data that is currently open in FP
Solutions. Using scenarios allows
you to work with your client’s data,
and run different unique
projections, while always having the
client’s basic data to return to.
The information provided to you by
a client, once entered, should be
saved as basic data without any
changes or recommendations from
you.
This allows you to create new scenarios from the same starting point and add
your changes and recommendations to the plan. You can also create a new
scenario based on another scenario.
To create a scenario
1. In an open client file, from the File menu, click Scenarios.
FP Solutions opens the Scenarios dialog box.
2. To create a new scenario from the basic data, click Reset to Basic Data,
and then Add. Enter a name for the new scenario and click OK.
FP Solutions creates a new scenario.
3. To create a scenario based on the current data, click Add. Enter a name
for the new scenario and click OK.
FP Solutions creates a new scenario.
4. To add notes to the scenario, click View Notes and enter your notes.
When FP Solutions prompts you to save the active scenario, click OK to
save your notes.
5. To work with a different scenario, in the Scenarios available in the current
file field, select the scenario you want to work with and click Load. To
rename a scenario, select it and click Rename. To delete a scenario,
select it and click Remove.
What’s next
All data changes are saved within each scenario, except for the personal and
plan information, which are common to all scenarios in a client’s file.
Now that you have a copy of the data you want to work with, you can apply
financial plans, and run optimizations and solves while having your client’s
basic data as a starting point to return to. For more information, see Working
with Financial Plans on pg.28.
Saving Client Files
You can save a client file by either clicking the
from the File menu, selecting Save, or Save As.
14
Save icon on the Toolbar, or
Selecting Save or the Save icon saves the file to a previously designated folder.
Selecting Save As allows you to save the file to a different location or with a
different name.
Creating a Custom Default File
With FP Solutions you can create and save a custom default file with all the
values modified to meet your specific needs, saving you from having to adjust
these values every time you create a new plan.
You can create and save as many custom default files as you need. However, if
the program’s defaults meet your needs, there is no need to create custom
default files.
To create custom default file
1. From the Client Profile wizard, choose Create a new plan and select a
type of plan to create, determine whether the spouse’s information is to
be included in the plan and click Next>>.
2. Choose FP Solutions Standard Default as the default plan to use, and
click Finish.
3. FP Solutions opens the modules associated with the plan you chose and
initializes the client plan.
4. Go through the Fact-Finding Interview, entering any values you would
like to have available for every client plan. See Default Settings to Review
for more information. To move between the sub-steps and tabs in the
sub-step, click the Next> and <Back buttons at the bottom of the dialog
box. To move between steps, click the Next>> and <<Back buttons.
; Note: You should only enter general information that would apply to
every client.
; Note: You can also use the Data menu to go to specific areas of the
default plan. Create a new plan, and click Finish at the first step. Then
from the Data menu, select the areas of the plan you want to customize.
5. When you have finished entering default information, click Finish.
FP Solutions saves the entered information and closes the dialog box.
6. From the File menu, choose Save User Defaults.
7. Enter a name for the default file and click OK. If you are creating more
than one default file, name each file so it can be easily identified.
FP Solutions saves the default file.
What’s Next
Next, you should review the default settings for the file. The default file you just
created will now be available when you are creating a new client file.
Default Settings to Review
There are many default values throughout the client file. The following are some
of the default values you may which to modify.
15
•
Assumptions—you may wish to customize all of the default assumption
settings,. To access the Assumptions dialog box, from the Data menu,
choose Assumptions. You should check the assumption settings for:
•
Return Index
•
Management Expense Ratio—enter 0 in all MER fields to exclude
MERs
•
Earnings Allocations
•
Realized Capital Gains
•
Fund Return Details—the categories have been allocated as proposed
by the Investment Funds Standards Committee
•
16
Inflation
•
Investment portfolio—there are five non-registered and five registered
model portfolios, based on the results of the Risk Tolerance
Questionnaire. You can enter the allocation for each portfolio.
•
Non-registered Investments—click the Taxation tab to set:
•
Annual portfolio turnover—enter the default assumption for the
annual rate of portfolio turnover. This is the rate of turnover based on
the buying and selling of investments, as opposed to the rate of
realized gains, which should reflect distributions.
•
Marginal tax rate
•
RRSP—click the Taxation tab to set the rate of portfolio turnover for
Canadian and foreign content
•
Locked-In RRSPs—click the Taxation tab to set the rate of portfolio
turnover for Canadian and foreign content
•
Pensions—If you are working with a group of people who all have the
same pension, you may wish to enter pension factors and joint survivor
defaults for this pension.
•
Projected Cash Flow—although the Optimized Cash Flow settings will be
adjusted for each client, you can enter standard defaults for the initial
optimization.
•
Net Worth—you can include Deferred Taxes and Living Values and Estate
Values on a Net Worth Statement
•
Needs—the needs analysis calculations are based on three different
investment strategies ranging from conservative to aggressive. On the
Return Assumption tab, enter the default portfolios and labels for each
of the strategies of the following user needs forms:
•
Retirement Capital Needs
•
Survivor Capital Needs—for each spouse
•
Disability Income Needs
•
You can also enter default Executor/Trustee fees in the Estate Needs
user form
; Note: The Return Assumption settings in each Needs form are
independent of each other and must be set on each form.
•
User-defined investment categories in the IFSC Fund Category—the IFSC
Fund Category.xud uses all seven investment categories and has two
user-definable categories--U.S. Equity and Small Cap (Equity Foreign).
The corresponding fund categories are linked to these two user-definable
fields. If you change the user–definable categories in this default file, you
must also modify the Return Allocation settings—click Fund Return
Detail on the Assumptions user form to change the settings. This file also
has all deposits set to annual at the end of the year and withdrawals set
at monthly, at the beginning of the period as this is often the case in a
Current scenario. When using this default file timing adjustments are
normally included in a Recommended scenario. Registered deposits can
be reset to start of year, while the non-registered deposit timing may or
may not be changed. The long-term impact of beginning of the period
deposits versus end of period deposits is significant when selected period
is annual, but there is very little impact when the selected period is
monthly.
Importing Data from Other Programs
You can easily import other client data files and insurance policies into the
current client plan. You can also import data from:
•
Probability Analyst
•
Cantax
•
Taxprep
•
Workbench
•
Portfolio Analysis
•
Q-plan
•
RetireWise
To import data
When you import data, the majority of the data is converted, however because
of differences between FP Solutions and the programs being imported from, tax
rates and assumptions are not included in the import. Any deposits or
withdrawals are also not usually included in the import.
You should check all imported files for required adjustments.
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1. From the File menu, choose Import,
and the type of file you are going to
import.
2. Enter the name of the file you are
importing, or browse to find the file.
3. Enter a new name for the imported file
and click Import. Do not use the same
name as the original file.
4. Open the new client file in FP
Solutions, click the Optimize toolbar
button.
5. On the Cash Flow dialog box, click
Reset Optimization.
6. Check the new file to ensure the data was imported correctly and to add
information that was not imported, and save the file
Areas to review
The following are the areas of the client file you should check to ensure the
imported data is correct:
•
Asset Allocation—FP Solutions includes seven investment categories.
Bonds and Equities are separated into Canadian and foreign and there
are two user-definable categories. Future portfolio allocations entered in
the other products do not transfer into FP Solutions. Portfolio
realignments can be entered without restrictions
•
Education and child care expenses—these are included in the RESP
module.
•
Bequests—You can enter tax-deductible and non-deductible bequests
separately. Bequests that occur at second death are entered in the Estate
Capital Needs module; bequests that occur at first death are entered in
the Survivor Capital Needs module. Final Expenses and an amount for
the Emergency Fund are entered separately for each spouse.
•
Other income—enter other income amounts on the Income Variables
page. The Defined Benefits calculations allow you to include two different
index rates.
•
Annuity calculations—Annuity calculations are based on life expectancy
and an assumed interest rate. An annuity factor is not used.
•
Leveraged investments—enter leveraged investments in the Debts
Liabilities module.
•
Portfolio turnover and realized capital gains—you can assign a different
rate of realized gains for each of the seven investment categories.
What’s next?
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Now that you have imported the file, checked it and made any necessary
corrections, you can use the file like any other in FP Solutions. For more
information, see:
•
Working with Financial Plans on pg.28
•
Working with Scenarios on pg.13
•
Working with Simulations on pg.39
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Working With Client Data
The first step in developing any financial plan is to collect the financial data
from your client. To help you with this process, FP Solutions has developed the
Fact-Finding Interview to help you gather the necessary client data, and the FP
Solutions Assistant to guide you through the entire process of collecting data
and creating a financial plan from that data.
Using the FP Assistant
The FP Assistant is an excellent way to familiarize yourself with the FP
Solutions program and to make best use of the program.
About the FP Solutions Assistant
The FP Assistant has been designed to help you make the best use of FP
Solutions. The FP Solutions Assistant guides you through collecting information
and creating a financial plan. It explains each step of the process, and opens
the necessary modules to complete the type of plan you are creating.
There are seven steps to completing a financial plan using the FP Solutions
Assistant:
20
•
Entering the basic data—opens the Fact-Finding Interview to allow you to
collect the basic financial information from your client
•
Review Basic Data—review the data you collected to ensure it is correct
•
Create a "Current Situation" scenario—this creates a projection based on
your client’s current financial situation
•
Create a "Current Situation—Save More" scenario—create a projection
based on the assumption that your client will save all disposable income
•
Recommended Asset Allocation— measure the impact of changing asset
allocation to the recommended allocation based on the risk tolerance
questionnaire
•
Recommended Financial Plan— create a financial plan with your
recommended planning strategies and any recommended financial
products
•
Common Planning Strategies—apply several planning strategies to your
client’s information
•
Print the Plan—create a printed documentation package for your client
To Start the FP Solutions Assistant
1. From the Help menu, choose FP Solutions Assistant.
The FP Solutions Assistant opens.
2. The yellow field at the top of each step has detailed information about the
task you are performing. Please read this field for specific information
about the step.
3. To move to the next step, click Next. To move back one step and edit
information you have added, click Reset to Previous, or to restart the
plan from the beginning, click Start Over.
4. In some steps, when you select an action to take, FP Solutions closes the
Assistant dialog box and opens the module you selected. After completing
your work in the module, return to the FP Solutions Assistant by
choosing FP Solutions Assistant from the Help menu.
The FP Solutions Assistant opens at the last step you were working on.
5. When you have finished the plan, you can add notes to the plan, and
print a document package for your client.
What’s next?
You now have a completed financial plan for your client. You can return to this
plan and edit the financial data and create additional scenarios to try other
what-if strategies if needed. For more information, see:
•
Working With Client Data on pg.20
•
Working with Financial Plans on pg.28
•
Working with Scenarios on pg.13
•
Working with Simulations on pg.39
•
Using the Optimize Cash Flow tool on pg.28
Creating a new Financial Plan
Creating a new financial plan starts with collecting financial information from
you client. If you do not know what kind of plan you are going to create for your
client, use the Fact-Finding Interview to enter your client’s information. If you
know what type of plan you are going to create, select the plan type, then enter
your client’s information.
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Using the Concept, Single Needs or Total Needs Plans
for Pre-determined Planning
FP Solutions includes pre-determined plans that are designed to only open the
modules that are necessary to complete that plan. If you know what kind of
plan you will be developing you can use one of the pre- determined plans to
simplify the information-gathering.
About the pre-determined plans
The types of pre-determined plans available are
•
Concept—this lets you create a sales concept such as Investment
Leverage and Tax Funding Alternatives. New concepts are made available
periodically—check the CCH web site regularly.
•
Single Needs—this opens all the modules required to complete a plan for
one specific need such as an RRSP illustration or education savings
•
Total needs—this opens all the modules required to complete a plan that
covers multiple needs such as retirement income planning or survivor life
insurance needs
To gather information with a pre-determined plan
1. Click the Create a new Financial Plan task button.
FP Solutions opens the new plan dialog box.
2. Select the pre-defined plan you wish to use and click Next >>.
3. Select a default file to use, either:
•
FP Solutions standard default
•
IFCS Fund Category
4. Click Finish.
FP Solutions opens the pre-determined plan modules and the FactFinding dialog box.
5. The yellow field at the top of each step and sub step has detailed
information about the data you are entering.
Please read this field for specific information about the step.
6. To move between the sub-steps and tabs in the sub-step, click the Next>
and <Back buttons at the bottom of the dialog box. To move between
steps, click the Next>> and <<Back buttons.
22
7. When you have finished the interview, click Finish. FP Solutions saves
the client information. To end the Fact-Finding Interview without saving,
you can click Cancel at any time.
What’s next?
Now that you have collected the information about your client you can start to
prepare a financial plan for them.
If there is business information for holding and operating companies, you can
enter it now, using the Business Fact-Finding Interview. For more information,
see Entering Business Information on pg.24.
Using the Fact-Finding Interview
The Fact-Finding Interview is a structured way to gather information from your
client that you will need to develop a financial plan. It is useful if you do not
know what type of plan you will be developing for your client, as it collects the
widest range of information.
About the Fact-Finding Interview
The Fact-Finding Interview leads you through gathering the initial data for a
new financial plan. There are 11 main steps in the Fact Finding interview to
collect information for:
•
Personal information about the client, including the goals and objectives
for the plan
•
Risk Tolerance and areas of concern
•
Lifestyle, retirement, survivor and estate needs
•
Sources of income
•
Non-registered investment and savings
•
RRSPs and RRIFs
•
Defined benefit pension plans
•
Real estate
•
Personal use assets and liabilities
•
Life and disability insurance
There are also sub-steps within each step to gather detailed information
relating to that step. You only need to complete the relevant steps in the
interview, and you can return to the Fact-Finding interview to add or edit the
information.
To gather information in the fact-finding interview:
1. Click the Create a new Financial Plan task button.
FP Solutions opens the new plan dialog box. Create a new plan and
Initial Fact-Finding Interview should be selected. If they are not, click to
select them.
2. Click Next >>.
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3. Select a default plan type to use, either:
•
FP Solutions standard default
•
IFCS Fund Category
4. Click Finish.
FP Solutions opens the modules for the Fact-Finding Interview and the
Fact-Finding dialog box.
5. The yellow field at the top of each step and sub step has detailed
information about the data you are entering.
Please read this field for specific information about the step.
6. To move between the sub-steps and tabs in the sub-step, click the Next>
and <Back buttons at the bottom of the dialog box. To move between
steps, click the Next>> and <<Back buttons.
7. When you have finished the interview, click Finish. FP Solutions saves
the client information. To end the Fact-Finding Interview without saving,
you can click Cancel at any time.
What’s next?
Now that you have collected the information about your client you can start to
prepare a financial plan for them.
If there is business information on holding or operation companies to enter, you
can enter it now, using the Business Fact-Finding Interview. For more
information, see Entering Business Information on pg.24.
Entering Business Information
You can use the Fact-Finding Interview to enter business-related financial
information for your client’s plan.
About the Business Fact-Finding Interview
The Business Fact-Finding Interview guides you through collecting businessrelated data
After entering the Company name and assumptions for available Small
Business Capital Gains Exemptions, there are four areas for gathering
information for each company:
•
24
Corporate Share Structure, including ownership, estate planning and
corporate values and income distribution, including values, regular
dividends, investment dividends, investment distributions, shareholder
bonuses
•
Corporate investments including assets values and deposits and
withdrawals and corporate real estate information for up to five
properties
•
Corporate debt information for up to five debts, and corporate loan
information for up to five loans
•
Corporate life insurance for your client and spouse, joint first , joint last
insurance and other non-related shareholders
To collect business information using the Fact-Finding Interview:
1. Start the Business Fact-Finding Interview by either:
•
If you have just completed the Fact-Finding interview for personal
information—FP Solutions asks if the current plan requires data
entry for business. Click Yes.
•
If you have previously completed the Fact-Finding interview for
personal information—clicking the Review Client Data task button,
choosing the Business Data tab, and clicking Begin Data Entry
FP Solutions opens the Corporate Structure and Assumptions dialog box.
2. The yellow field at the top of each step has detailed information about the
task you are performing. Please read this field for specific information
about the step.
3. Click the checkbox beside the Holdco or Opco fields and enter the name
of the holding or operating company. You may enter up to two holding
companies and four operating companies.
4. Complete the next four steps for each company you entered. To move
between the sub-steps and tabs in the sub-step, click the Next> and
<Back buttons at the bottom of the dialog box. To move between steps,
click the Next>> and <<Back buttons.
5. When you have finished the interview, click Finish. FP Solutions saves
the business information. To end the Business Fact-Finding Interview
without saving, you can click Cancel at any time.
What’s next?
Now that you have collected the business information about your client you can
start to prepare a financial plan for them.
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Reviewing and Editing Client Data
Once you have entered the client data you should review the data to ensure it is
correct. Also, after entering client data you may need to update data that was
missed, or to add data or add modules to a client plan.
To review and edit existing client data
1. Ensure the client plan that you wish to review is open.
2. Click the Review Client Data task button.
FP Solutions opens the Review Client Data dialog box.
3. Select either
•
To review all data for this client—Review Existing Client Data
•
To review a specific step—click Manually select the data entry step
to complete and select the step to review
4. Click Begin data entry.
FP Solutions opens the client data to either the beginning of the FactFinding Interview or the selected step.
5. If you are:
•
reviewing the entire plan—review and enter corrected data for the
plan, and click Finish.
FP Solutions updates the information and returns to the Main
workspace.
•
reviewing individual steps—review and enter corrected data in the
step, and click Finish.
FP Solutions updates the information for that step and returns to the
Review Client Data dialog box where you can select another step to
review
Updating a client data module
If you know which modules you want to review, you can go directly to that
information.
To update a module
1. From the Data menu, select the module you want to update.
FP Solutions opens the dialog box for that module.
Adding a Module
You can add modules and the related information, if you wish to expand the
original financial plan.
To add a module
1. From the Data menu, select the module you wish to add. FP Solutions
confirms that you would like to add the module.
26
2. Click Yes.
FP Solutions adds the module to the plan and opens the module dialog
box.
3. Follow the directions in the dialog box to enter the client data for the
module.
27
Working with Financial Plans
Now that you have collected your client’s financial information, you can start to
create a financial plan for them.
Viewing a Financial Plan
Once you have entered the client information and reviewed it to ensure it is
correct, you can now view the documents for the financial plan you have
started.
About the financial plan
With the client’s financial information in place, you can now start to create
scenarios, run projections and develop a financial plan for your clients. Viewing
the financial plan lets you work directly in the documents you are creating for
you clients
To view a financial plan
1. Ensure that the client’s financial plan is open.
2. Click the View Financial Plan task button.
FP Solutions opens the Please select a module dialog box.
3. Select the section and module you would like to view, and click Go.
FP Solutions opens the documents for this module.
If this module is not currently part of the plan, FP Solutions asks if you would like to
add it to the plan. Click Yes to add the module and begin working with it, or No to
return to the Please select a module dialog box.
4. You can open the Fact-Finding Interview dialog box for a module by
selecting the module and clicking Data Entry. To close the Please select
a module dialog box without opening a module, click Done.
What’s next?
You can now start to apply planning strategies, optimizations, and solves to
your client’s financial plan.
Using the Optimize Cash Flow tool
The Optimize Cash Flow tool manages a projected cash flow according to the
sets of rules you define.
About Optimizing Cash Flow
The object of optimizing cash flow is to manage the amounts projected to be
available in excess of your client’s needs and to solve projected deficiencies
using accumulated assets. The result matches the cash flow to the lifestyle
need to show how long the assets are likely to last. These results help you
asses the likelihood of success for the plan, as well as determine the
appropriate course of action required to make the plan successful.
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Optimizing cash flow is based on two
series of logic setting that you adjust
according to your client’s particular
position.
The first series allows you to set
parameters for the management of
amounts projected to be available in
excess of your client’s lifestyle needs.
This includes allocating amounts to be
contributed to RRSPs, invested in nonregistered accounts, or applied to
outstanding debts. Excess cash flow
can also be allocated to consumption
beyond lifestyle needs.
The second series allows you to set parameters for projected deficiencies. This
includes sourcing income from RRSPs and non-registered accounts.
Deficiencies can also be managed by borrowing the necessary funds, and you
can show your clients the less-desirable option of reducing expectations for
income in retirement.
To optimize cash flow
1. Open the Cash Flow module of the client’s plan. This allows you to see
the cash flow graph.
2. Click the Optimize button on the toolbar.
The Cash Flow dialog box opens.
3. Under Cash Flow Excess, enter ages at From Age and To Age for the
optimization time frame, and select any of the parameters for cash flow
excess you want to apply.
4. Click the tabs at the top of the Cash Flow dialog box to set the
parameters for contributions to RRSPs, and investments, or to be applied
to outstanding debts. See Working with the Optimization parameters for
more information.
5. Under Cash Flow Deficiency, enter ages at From Age and To Age for the
optimization time frame, and select any of the parameters for cash flow
deficiency you want to apply.
6. Click the tabs at the top of the Cash Flow dialog box to set the
parameters for withdrawals from RRSPs and investments, or to increase
debts. See Working with the Optimization parameters for more
information.
7. Click the Advanced tab and select the optimization method.
8. Click Optimize.
FP Solutions runs the optimization.
9. You can reset all selected values to 0 by clicking Reset Optimization —
deselect any values you do not want reset. You can also undo the last
29
optimization and reset the values to what they were prior to the last
optimization, by clicking Undo Last Optimization.
Cash Flow graph before optimizing.
Cash Flow graph after optimizing
Working with the Optimization parameters
There are several areas within the Optimization tool that you can set to meet
your needs.
From Age and To Age
You can choose to optimize any time frame within the period covered by the
projections, The time frames for excesses and for deficiencies do not have to be
the same, however more often than not, you will probably optimize the entire 60
years projected for both. Select the periods to be optimized in the field.
Cash Flow Excess
Select the categories to be included in the calculations and enter the
percentages of the projected excess cash flow to be allocated to each category.
The sum of the percentages must equal 100%. The percentage settings enable
you to prioritize the allocation of projected excess cash flow. Any item not
checked is not used in the procedure. For example, you may wish to manually
enter RRSP contributions, so you would not select that category. You may also
choose to allocate 0% to a selected category—this would not allocate any funds
to this category but would assign any excess cash from another category to it.
30
For example if Deposit to RRSPs is
selected and set to 100%, and Pay
Down Debts is also select, but set to
0%, any amount projected to be
above the RRSP contribution
amount is assigned to pay down
debt. If all debts were retired, excess
funds would be unallocated.
If Deposits to Non-registered were
also selected and the allocation set
to 0%, any excess amounts after a
maximum RRSP contribution would
be split equally between nonregistered accounts and paying
down debts.
If the allocation is more than 0%, all excess funds would be assigned to the
non-registered accounts, as there is no limit to the amounts that can be
invested in non-registered accounts.
; Note: To include a category to be used when other selected categories
have been maximized, select the category and allocate 0%. All categories
selected and allocated a percentage other than 0 are treated as priority
categories. When more than one category is included, with a 0%
allocation, excess amounts still remaining after the priority categories
have been maximized are divided evenly among the 0% categories.
Cash Flow Deficiency
Select the categories to be included in the calculations and enter the percentage
of the projected cash flow deficiencies to be offset from each category. The sum
of the percentages must equal 100% and any item not checked is not used in
the procedure. The percentage settings enable you to establish where funds will
be drawn from to cover projected deficiencies and the order of priority.
For example, if you select Withdrawal
from RRSPs/ RRIFs and set it to 50%,
and select Withdrawal from nonregistered, and set it to 50%, once all
the funds have been exhausted from
either RRSPs or non-registered, 100%
of the deficiencies would be drawn
from the remaining accounts. After all
accounts have been depleted, the
procedure will automatically
recalculate Lifestyle Needs in the
remaining years to show the reduction
that would be necessary.
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RRSP/RRIF
If you choose to include RRSPs in the optimization, set the allocation priorities
for the percentage of excess cash flow to be contributed to RRSPs and the
priorities for offsetting projected deficiencies on the RRPS/RRIF tab.
You can choose to have contributions made on behalf of either spouse or both.
If only one spouse is selected, contributions will only be made for that spouse, If
both are selected, contributions are made for both according to the percentage
allocation entered.
In many cases, you will want to maximize the spouse in the higher tax bracket’s
contribution room before any contributions are made on behalf of the other
spouse. To do this, enter 100% for the spouse in the higher tax bracket. The
procedure then allocates all excess cash flow to that spouse’s RRSP first. Only
excess amounts still remaining would be contributed on behalf of the other
spouse. For the amounts to be contributed, enter the percentage to be allocated
to Personal and Spousal accounts for each selected spouse.
Select the accounts that projected deficiencies should be offset from. If one of
the RRSP accounts is not selected, it only means that the Optimize procedure
will not use that spouses account. RRIF minimum is automatic. You may also
select a spouse’s account and enter 0%, in which case the procedure will use
that spouse’s account, but not until the other spouse’s RRIF account has been
depleted. The No RRSP withdrawals pre-retirement option prevents the Optimize
from drawing on RRSPs to offset projected deficiencies in the pre-retirement
years.
Non-registered
If you choose to include non-registered accounts in the optimization, set the
allocation priorities for the percentage of excess cash flow to be invested in nonregistered accounts and priorities for offsetting projected deficiencies on the
Non-registered tab.
You can have deposits made to either spouses’ account or the joint account,
Deposits are made according to the percentage allocation entered for the
selected accounts. As there are no limits to amounts that can be deposited to
non-registered accounts, you must enter a percentage other than 0 for a
selected account to b recognized by the optimization.
Select the accounts that projected deficiencies should be offset from and the
percentage of each projected deficiency to be drawn from the selected account.
You can choose to enter 0% for selected account, in which case, the account
will be used by the procedure, but not until the other selected accounts have
been depleted.
Debts
If you have chosen to include debts, set the allocation priorities for the
percentage of excess cash flow to be allocated to the pay-down of debts on the
Debts tab.
Select the debts to be paid down using excess cash flow on the order of priority
that they should be retired, If your client is managing high interest consumer
debt—Household—that should be the first priority. In the subsequent fields
32
select the debts that excess cash should be applied to, as higher priority debts
are retired.
Select the category of debt to borrow necessary funds from. The selected
category should normally be the same. The selected category is normally the
same category as the first priority debt to be reduced by excess cash flow.
Advanced Settings
There are four different optimization methods available. The method you select
depends on the degree of control you want to have over the process, and the
degree of accuracy you require:
•
Basic—the basic optimization performs 5 pre-RRIF iterations, then three
more complete iterations. Basic usually achieves the desired result,
however you may with to run an additional iteration in some case, for
fine tuning, using the Manual setting.
•
Extended—the extended optimization performs 8 pre-RRIF iterations,
then 4 more complete iterations. Extended takes longer to execute,
however it achieves a higher degree of convergence than Basic.
•
Custom—the custom optimization allows you to set the number of
iterations you desire, using the Custom Setting controls.
•
Manual—the manual optimization gives you the highest degree of control,
executing a single iteration at a time
•
Optimization to Recommended Settings—sets the excess and deficiency
parameters to the most optimum for income splitting based on the
client’s individual circumstance.
•
Optimization to Default Settings—restores the optimize settings to their
defaults.:
•
All deposits are made to the non-registered investments
•
All withdrawals are made from registered and non-registered in equal
percentages
•
The settings between the client and spouse are defaulted to a 50-50
allocation
Using the Solve Tool
The Solve tool is used to show the effect of deposits or withdrawals on an
account over a specified period.
Before you use the Solve tool, you must have all the data entered for the
account you are working with. To open the modules you are working on, from
the Data menu, select the module, complete the fields on the dialog box for that
account.
About the Solve tool
33
The Solve tool shows the accumulated effect of withdrawals or deposits of a
specified amount, over a specified period. Solves can be run on client and
spouse RRSPs and non-registered investments, as well as education accounts.
To run a solve
1. From the Goto menu, select the module you want to work with, and
ensure that all necessary data for the account you are running the solve
on has been entered.
2. From the toolbar, click the Solve button.
FP Solutions opens the Solve for Value dialog box.
3. Follow the instructions in the yellow fields in the dialog box to set the
parameters for the solve, and click Finish when you have completed all
five steps of the dialog box.
FP Solutions runs the solve and shows the results on the graph on the
document page for that module.
What’s next?
Once you have solved a module, you can use the graphs on the Summary page
to show the effects of the solve.
Applying a Common Planning Strategy
There are several planning strategies that you can apply to your client’s plan to
show the effect of financial strategies other than investment and insurance
solutions. Using a planning strategy automatically applies financial changes to
your client’s plan, saving you from manually entering the information for these
strategies.
About common planning strategies
Common planning strategies use non-product-specific industry standard
planning strategies and concepts. The effectiveness of each strategy depends on
your client’s individual circumstances, but the cumulative effect can be quite
significant.
To apply common planning strategies
1. Open the client’s financial plan..
2. In the Main workspace, click Add Common Planning Strategies.
FP Solutions opens the Common Planning Strategies dialog box.
3. The yellow field at the top of each tab has detailed information about the
common planning strategy you are selecting. Please read this field for
specific information about that common planning strategy.
4. In each of the four categories select the strategies you want FP Solutions
to apply, The strategies are: Sources of Income; Non-registered
Investments, RRSP / RRIF and Defined Contribution Pensions. Click
OK.
34
What’s next?
After you have applied the common planning strategies, you may want to reoptimize your client’s cash flow.
Using a Planning Concept
A planning concept can be created as a stand-alone plan or it can be added to
an existing plan.
To use a planning concept,
1. click Open a Planning Concept in the Main workspace.
The Please select a Planning Concept dialog box opens, listing all
planning concepts that are installed on your computer.
2. Select the concept you want to use and follow the instructions in the
dialog box. The yellow field at the top of each tab has detailed
information about the common planning strategy you are selecting.
Please read this field for specific information about that planning
concept.
CCH is regularly developing new concepts; check the CCH web site regularly for
new ones.
35
Setting up, Previewing and Printing Reports
When you have finished a financial plan for a client, you may wish to print it for
review, or to give it to your client.
About printing documents
You can select any of the documents in the financial plan to print, as well as set
page margins and breaks, and create headers and footers for the documents.
You can select which pages to print or choose a print package that will print the
necessary pages for the plan you are working with.
To set up the page for printing
1. From the File menu, select Page Setup.
2. Select your page settings, and click OK.
FP Solutions saves the page settings.
To preview print documents
1. From the File menu, select Print Preview.
2. Select the page of the document you want to preview and click Print
Preview.
FP Solutions opens the preview view of the document, showing it the way
it will look when it is printed.
3. To close the preview, click Close.
To print documents
1. From the File menu, select Print.
FP Solutions opens
the Full Print dialog
box.
2. Select a print package to print, or from the Available documents field,
select the documents you want to print, then click the right arrow button
to move the documents to the Documents to be printed field. You can use
the Shift key and Ctrl key to select multiple documents. Use the left
arrow key to remove any documents you don not want to print from the
Documents to be printed field.
36
3. By changing the Module Type dropdown you can also select business
documents and concept/custom documents to be included in the report.
4. If you haven’t already do so, to set up the page for printing, click the
Print Settings tab and edit the settings. To add headers and footers to
the document, click the Headers/Footers tab, select a type of header
and footer, and enter the text—there is limited space available for
headers and footers, so header and footer text should be brief.
5. Click Print.
FP Solutions prints the report.
Printing to an Excel spreadsheet
You can print to an Excel spreadsheet, which saves the selected documents as
an Excel file.
To print to an Excel spreadsheet
1. From the File menu, select Print.
FP Solutions opens the Full Print dialog box.
2. Select a print package to print, or from the Available documents field,
select the documents you want to print, then click the right arrow button
to move the documents to the Documents to be printed field. You can use
the Shift key and Ctrl key to select multiple documents. Use the left
arrow key to remove any documents you don not want to print from the
Documents to be printed field.
3. Click Print to Excel and enter a name for the file.
FP Solutions saves the selected documents as an Excel file.
Reviewing Assumptions
Assumptions are the backbone of all financial plans and are what drive all of
the calculations within the financial plan. financial plan. You should review the
default assumption settings to ensure that they meet your needs, and make any
necessary adjustments. See Creating a Custom Default File on pg.15 for more
information. This will save you from changing the rate of return and other
assumptions every time you begin a plan.
About reviewing assumptions
Assumption settings to check including:
•
Return Index
•
Management Expense Ratio—enter 0 in all MER fields to exclude MERs
•
Earnings Allocations
•
Realized Capital Gains
•
Fund Return Details—the categories have been allocated as proposed by
the Investment Funds Standards Committee
•
Inflation
37
To review assumptions
1. From the Data menu, choose Assumptions.
FP Solutions opens the Assumptions dialog box.
2. Review and edit the assumptions, and click OK. To review and edit
return allocations, click Fund Return Details. To work with the
assumptions on a worksheet, click Edit Variables. To close the dialog
box without making changes, click Cancel.
What’s next
Now that the default assumptions meet your needs, you can run solves and
optimizes on your client’s plan.
38
Working with Simulations
FP Solutions contains a sophisticated modeling environment for comprehensive
financial planning, with in-depth tax calculations and the extensive flexibility to
allow you to illustrate the global impact of virtually any planning strategy. This
framework, is built around a single set of return assumptions that are
conservative or historically probable—expected returns—to ensure that the
recommendations are sound. FP Solutions’ Simulation tool, however, does not
rely on a single set of assumptions. It allows you to assess the projected results
of an entire financial plan or individual investment portfolios by taking in to
account the realities of the market volatility.
Simulation is the process of calculating projections over and over, each time
with changes to the variable assumptions. With Monte Carlo simulations, the
changes are random, while with the Variance simulation procedure, the
changes to the parameters are controlled.
Using Monte Carlo Simulations
Monte Carlo simulations are used in finance, but its use has been limited by
the fact that the calculations can be very intensive, taking from several minutes
to several hours to solve a problem. The technique repeatedly samples random
values to calculate multiple scenarios of a model, producing multiple possible
outcomes. The random selection of values is much like a roll of the dice, which
is where the Monte Carlo simulation gets its name.
The Simulation tool allows you to perform Monte Carlo simulations using a
random sampling of values within the standard deviation of the various asset
classes. You can also include deviation of the rate of inflation, as well as the
rate of realized gains on equity investments. Within the context of a
comprehensive financial plan, Monte Carlo simulations create an analytical
model that enables you to assess the potential effects of the volatility of
financial markets. The report details and organizes the different outcomes,
depending on the number of simulations you wish to run.
Monte Carlo simulations open up new discussion of risk vs. reward and the
realities of market volatility. The simulation results effectively validate the
benefits of acting on your recommendations and enable you to focus on the
probability of success.
Using Historical Simulations
Historical simulations are not yet available with this release.
Using Variance Simulations
The Variance simulation performs a series of what-if trials, adjusting the return
assumptions within a user-specified range to test the results of a financial plan
assuming returns are somewhat lower, as well as somewhat higher than those
used as the basic assumptions. This effectively tests the margin of error on your
plan assumptions. You can also perform a simplified Variance test from the
Assumptions dialog box.
39
Running Simulations
To start a simulation
1. From the Tools
menu, choose
Simulation
Tool.
FP Solutions
open the
Ledger
document and
the Simulation
menu.
The Ledger document shows two graphs of the results of each simulation that is run.
2. From the Simulation menu, click Run Simulation.
FP Solutions opens the Simulation Tool dialog box.
3. On the Probability Analysis tab, select the type of analysis to be
performed, either Monte Carlo or Variance Test, and enter the report
settings.
If you are running a Variance Test simulation, enter the variation to be applied on
the projected rate of return of the various asset classes. The procedure runs eight
simulations—four higher and four lower—at evenly distributed intervals within the
variation entered, plus the Base Plan
4. Select either to perform simulations on the full financial plan or on single
assets.
40
If you choose to run a simulation on the full plan, you should check your
Optimization Settings. If you choose single assets, the Single Assets To Include
check boxes are activated—select the assets you want to include in the simulation.
Pension accounts cannot be included.
5. At Report Settings, enter the ages which you like the results to be
displayed for, for comparison with the base plan.
The Ledger document displays the results of each simulation at three specific points
in time that you select. For example, you may wish to summarize results at your
client’s retirement age, life expectancy and a point in between.
The projected asset accumulations from each simulation include investment assets
only, as the assets used to produce income, by default. If you wish to include all
assets, de-select the Calculate values using investment assets only option.
6. In the Life Expectancy fields, enter values from a life expectancy table, or
estimate them for comparative purposes. If you do not wish to show life
expectancy, enter values that are larger than the range of the period to
be graphed—you cannot enter 0.
7. At Number of Simulations, enter the number of simulations you want to
run. See About setting the number of simulations in Settings for
Simulations on pg. 42 for more information.
8. Click the Return Assumptions and Earnings Allocation tabs to set
assumptions from within the simulation dialog box. The assumption
settings for the simulation should be the same as the assumptions for
the basic plan.
9. Click the Standard Deviation tab to set deviation rates. You can also
enter the number of individual investments at # of Assets per investment.
See About setting standard deviations in Settings for Simulations on pg.
42 for more information.
10. If you are performing full financial plan simulations, click Optimize
settings, and adjust the optimization settings. See About setting
Optimize settings in Settings for Simulations on pg. 42 for more
information.
11. Click Run Simulation.
FP Solutions starts to run the simulation.
; Note: It is recommended that you do not run other programs during the
simulation process. The simulation requires most of your computer’s
resources, and may terminate if too many other demands are placed on
your computer.
41
The Simulation Status window displays an estimate of the time remaining to
complete after the first simulation. You may wish to change the number of
simulations to be performed, depending on the amount of time you are will to allow
the process to continue.
12. To change the number of simulations, click Pause after Current
Simulation.
FP Solutions pauses when the current simulation is complete.
13. You can either:
•
change the number of simulations to be performed and click Resume.
•
If you want to cancel the simulations and view the values from the
simulations run until that point, click Abort. The Base plan does not
appear on the document, as it is the last simulation run
•
If you want to cancel the simulations, but want to view the Base plan
values, change the number of simulations to be performed to the
same number as have been performed and click Resume.
Settings for Simulations
There are several settings for simulations that effect the outcome. This section
provides the reference information to help you understand these settings.
About setting the number of simulations
At step seven in Starting a simulation, you set the number of simulations to be
run. The number of simulations you choose depends on the type of analysis,
the degree of accuracy required and the time available to perform the
simulations. Single asset calculations do not use many computer resources and
do not take long—you should set the Simulation too to perform at least 250
simulations to get an adequate sampling, however you can perform as many as
1,000.
Monte Carlo simulations on a full financial plan use far more computer
resources, as the simulation re-optimizes the plan with every simulation. You
can perform as few as 10, however to get a wider sampling, you should run 100
or more. This can take a few minutes to several hours, depending on the
optimization settings.
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To reduce the time required to perform the simulations, you can use the
Custom feature in the Optimize tool’s Cash Flow dialog box to perform as few as
two iterations, for example, two total one pre-RRIF iterations. Excesses and
deficiencies that are not optimized are credited and charged respectively as the
Cash rate, For most cases, these settings are adequate to produce dependable
results for analysis. For cases where more analysis is required, you may wish to
run the simulations at the Basic or Extended setting while you are at lunch or
overnight. Your system resources can be diminished after intensive simulations,
so it is recommended that you save your results and then restart your
computer.
Although the Variance simulation procedure also re-optimizes with each
simulation, it does not take as long, as only eight simulations are run.
About setting standard deviations
At step nine in Starting a simulation, you set the standard deviations for the
simulation. The Monte Carlo procedure uses random values in each simulation,
for each year projected, based on:
•
The Return Index for each asset class as entered on the Return
Assumptions tab
•
The Standard Deviation of each asset class
•
The Rate of realized gains as entered on the Earned Allocation tab
•
The deviation rate to be applied on the Rate of Realized Gains for each
asset class
•
The inflation assumption
•
The deviation rate to be applied to Inflation
With the range of variables involved in the deviation rates, there are literally
millions of possible outcomes.
You can further widen the sampling by entering multiple assets for each asset
class. For example, if you were working with stock portfolios, you could enter
the number of individual stocks from each asset class. Although this increases
the number of variables for a potentially wider sampling, standard deviation
effectively reduces as the number of investments in an asset class increases.
About setting Optimize settings
At step ten in Starting a simulation, you set the Optimize settings for the
simulation. You may wish to use the Custom control to minimize the number of
iterations with each optimization, in the interest of saving time. In general, most
of the other optimizations settings should be the same for your simulations as
for the basic plan. However, if your plan was optimized over different time
periods, or you manually entered deposits, for example, you may wish to adjust
the time frame to be optimized in the simulations.
What’s next?
Once the simulation is complete, you can view the results on the Results
document. See Viewing the Simulation Results on pg.44 for more information.
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Viewing the Simulation Results
The top graph on the Results document charts the path of each individual
simulation, showing the ups and downs of the simulations, as well as the wide
range of possible outcomes. When you perform more than 250 simulations, only
the first 250 are graphed. As the simulations are random however, this usually
represents a legitimate cross-section of the total sampling.
The second graph summarizes the results of all simulations. For each age, the
bar graph shows the percentage of simulations where the assets successfully
generated income to that age. The horizontal line on the graph is set at 70%,
and helps to measure a favourable probability of success. The ledger displays
the specific values for each of the simulations.
The Base Plan simulation, which is always completed last, uses the same
assumptions as were used in the development of the financial plan, with no
standard deviation. This maintains the integrity of the comparison by ensuring
that all of the results in the report are obtained within the same parameters.
The financial plan, more often than not, will have been developed with more
rigorous optimizations. The Average and Median results of all trials run are
calculated and compared to the Base Plan results at the top of the ledger.
Sorting Results
Both Asset and Estate values, for each of the three ages selected, are displayed
for each simulation. They are initially organized in the order they were
generated.
To sort results
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1. Click the Sort Results button.
FP Solutions opens a dialog box that lets you to sort the results in any of
the eight columns in ascending or descending order.
2. You can click the Clear button to clear all values from a Results page. All
values are automatically cleared when you run a new simulation over
existing results.
Saving Results
Do not use Save from the File menu or the toolbar to save the Results pages, as
simulation results are not saved in the client file.
To save results
1. From the File menu, click Print.
2. Select the documents to be saved and click Print to Excel. See Printing
to an Excel spreadsheet on pg.37 for more information.
Although there are only three Report pages, enabling you to only show three
simulations in FP Solutions at the same time, you can save as many simulation
reports as you like by printing to Excel. After adding the Report documents to
your new workbook, simply run new simulations in FP Solutions over the
existing results.
Setting the chart range
You can also adjust the range of ages to be displayed on the graphs.
To set the age range on the graphs
1. Click Chart Settings.
FP Solutions opens the Chart Settings dialog box.
2. Select the range of ages to be displayed from the drop-down menus and
click OK.
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Working with Investments
All FP Solutions programs allow you to project several investment portfolios,
including:
•
Non-registered for Client, Spouse, Joint owned
•
Trust Investments
•
RRSP for Client, Spouse
•
RESPs
•
Defined Benefit Pensions (LIRA) for Client, Spouse
•
Corporate accounts
In all programs, each portfolio is allocated among the asset classes—Cash,
Bonds, Equity—within a seven investment categories:
•
Cash & Equivalents
•
Bonds: Canadian
•
Bonds: Foreign
•
Equities: Canadian
•
Equities: Foreign
•
two user-definable categories
The projected returns for each portfolio are calculated based on the return
assumptions set for each of the seven investment categories, and the earnings
allocation of each category—for example, distribution of interest, dividends, and
capital gains.
Projected returns are also influenced by the rate of Realized Gains assumed for
each category and the rate of portfolio turnover—for example, investor style.
This enables FP Solutions to automatically track ACB, and calculate current
and deferred taxes based on distributions and withdrawals.
Setting Return Assumptions for Investments
To calculate returns accurately, you can set Return Assumptions for
investment portfolios.
About the Return Assumptions
The Return Assumption settings are global and apply to all investment
portfolios so the return assumptions, including the two user-definable
categories, should be set up before you begin working on a client file.
To set return rates and user-definable investment categories
1. From the Data menu, choose Assumptions.
FP Solutions opens the Assumptions dialog box. The user-defined
categories are the two rows of fields towards the bottom of the box.
46
2. Select the asset class for each of the two user-definable investment
categories from the drop-down menus—either Bonds or Equities, and
whether the category is Canadian or Foreign.
3. In the text fields, enter a name for each of the categories. The names you
choose are applied as labels throughout the program.
4. Enter a rate of return for each of the seven investment categories in the
Assumptions user form. The rate entered for each category is assumed to
remain the same over the course of the projections.
5. If you wish to show varying rates of return, click Edit Variables on the
Assumptions dialog box and enter the rates on the Variables page, either
directly in-cell, or using the Custom Trend/Random Number Generator
tools by clicking the button at the top of each column.
If varying rates of return have been entered for an investment category, that
category's control in the Assumptions user form is disabled. Whenever any control is
disabled, you must go to the corresponding Variables page to adjust values.
6. Click OK.
FP Solutions saves the return assumptions in the client file. These
changes to the default assumptions are not automatically saved as
program defaults.
Setting Management Expense Ratios
You can include MERs in the calculations to show the effect on long term
returns or for full disclosure. The Index document shows the return
assumptions for all seven investment categories, net of the management
expense ratios.
The earnings allocations entered dictates the tax treatment of non-registered
investments. FP Solutions 2000 also calculates and tracks foreign content,
ACB, distributions, and portfolio turnover, as well as realized and unrealized
gains.
About setting MERs
The net return for each investment category is calculated as the Return Index
minus the MER. To exclude MERs from your projections, simply enter 0 in all
Management Expense Ratio fields.
To set MERs
1. From the Data menu, choose Assumptions.
FP Solutions opens the Assumptions dialog box.
2. Click the Earnings Allocation tab.
3. Enter allocations of interest, dividends, and capital gains for each of the
seven investment categories. You can enter a different rate of realized
gains for each category to project the results of varying degrees of tax
efficiency.
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Creating Investment Profiles
You can develop portfolios for your clients in the Investment Profile module,
using FP Solutions’ investment database. The documents list the individual
investments in each portfolio and graph the portfolios by investment category,
and can also include investment details such as rank, MER, standard deviation,
and historical returns. You can populate the investment database directly from
the fund database programs. Import utilities are included for Bell Charts ® ,
Fund Profiler ® , Pal Trak ® , and Globe HySales ® . You can also enter
investments manually.
About investment profiles
You can generate graphs to illustrate your clients' current portfolios as well as
illustrate recommended portfolios. To assist you in determining the appropriate
asset mix to recommend, FP Solutions includes a Risk Tolerance questionnaire
as part of the Fact-Finding Interview. The questionnaire is a set of 18 questions
to evaluate investor profile and risk tolerance. The questions are designed to
assess your clients' current financial position, their goals, investment
knowledge, investor style, and whether they are active or passive investors, as
well as their attitudes toward issues such as safety, volatility, and the need for
liquidity.
The FP Solutions Risk Tolerance assessment is very unique. It enables you to
save time by assessing tolerance for non-registered and registered portfolios for
both Client and Spouse, all at the same time. In FP Solutions, the lifetime
assessment goes beyond today's suggested asset mix, providing time- and ageweighted future balancing.
To complete the risk tolerance questionnaire
1. From the Data menu, and the Client Information sub-menu, choose
Investment Profile.
FP Solutions opens the Risk Tolerance dialog box.
2. Select the type of question questionnaire to complete, either:
•
Combine Client/Spouse Assessment—to complete the questionnaire
for a couple, with a single set of responses. The two spouses' risk
tolerance is treated as being the same.
•
Separate Client/Spouse Assessments—to complete a separate
questionnaire for each spouse. Two sets of response fields allow you
to complete both simultaneously.
•
Manually select risk tolerance—to set the risk tolerance on the four
portfolios without completing the questionnaire.
3. Select a response to each question from the drop-down menus and click
Next when you have finished each section. You can click Back to return
to a previous section. Click Finish when you completed the
questionnaire.
FP Solutions creates a recommended portfolio based on the answers in
the questionnaire.
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4. To modify the allocations in the suggested portfolio, click Model
Portfolios and edit the allocation percentages.
FP Solutions changes the charts on the Profile document.
What’s next?
Each question carries a certain weighting depending on the response. The
program suggests a model portfolio based on the combined weighting of all
responses, and calculates future realignments based on client age and the
responses to time horizon questions.
The results of the risk tolerance assessment are shown on the bar graph (meter)
on the Profile document.
If no bar appears on the graph, it is because the results suggest an ultraconservative approach.)
You can choose to use the suggested weighting in Year 1 only, or you can add
the realignment suggestions at either 1, 5 or 10 year intervals.
49
Developing Portfolios
Creating an Investment Database
You can import information already in an existing database program into the FP
Solutions Investment Database, as well as creating your own custom
investment entries.
The mutual fund database programs that can be used for importing
information are:
• Bell Charts ®
• Fund Profiler ® ,
• Pal Trak ®
• Globe HySales ® .
There are also five user-definable other investment categories available so you
can add your own investments. See Creating Custom Investments on pg.55 for
more information.
FP Solutions uses the 33 standard mutual fund categories as proposed by the
Investment Funds Standards Committee.
About importing data to the database
Before you can create a database in FP Solutions, you must save the
information you are going to import in the program you are importing from.
FP Solutions uses that information from your mutual fund database program to
create a file that includes all funds and their category, rank, MER, standard
deviation, and 1, 3, 5, and 10 year historical returns, when available. 1, 3, 5,
and 10 year historical returns are used per IFIC's guidelines for the use of
marketing materials.
The four programs you can import information from do not all rank the funds
the same way, and they may not calculate Standard Deviation in the same way,
so there can be minor discrepancies in the data from one program to the next.
To populate the database the file
1. In the program you are importing from, save the information to import.
2. In FP Solutions, from the Tools menu, choose Mutual Fund Data Import
and select the program you are importing data from.
3. Browse for the file and click OK.
FP Solutions imports the information and creates a database.
4. To update the data in the FP Solutions database from the same mutual
fund database program, repeat steps 1 to 3.
; Note: If you import information from another database program, FP
Solutions warns you that it will delete all investments imported using the
50
original program—custom entries are not deleted. You continue with the
import, or cancel the import.
What’s next?
You can view the database information on the Database tab of the Investment
Details dialog box. See Working with Investment Databases on pg.51 for more
information.
Working with Investment Databases
When you have created an investment database in FP Solutions, you can now
view and work with the data.
To work with the investment database
1. From the Data menu, and Client Information sub-menu, choose
Investment Details.
FP Solutions opens the Investment Details dialog box.
2. Click the Database tab.
3. To view the funds from a specific category, click the Investment type
drop-down menu and select the investments to view.
4. To sort the funds, click the Sort by drop-down menu and select the
primary sort criteria, then click the Then by drop-down menu and select
secondary sort criteria. Click the Refresh button to update the database
display.
FP Solutions displays the funds in the order you selected.
5. You can mark a fund you work with frequently as a favourite by
highlighting the investment and clicking Details. On the Mutual Fund
Data user form, check the Marked as favourite option and click OK.
6. To create a custom fund, click Create, then enter the necessary
information for the investment.
7. You can use the two option buttons at the bottom of the Investment
Detail dialog box to sort the investments to show favourites and show
custom funds.
8. To view details on a specific fund, highlight it and click Details.
9. To remove a fund from the database, highlight it and click Remove.
10. To add an investment in the data base to an investment portfolio, click
Transfer to Investment Details.
What’s next?
You can now start to develop an investment portfolio for your client. See
Developing an Investment Portfolio on pg.52 for more information.
51
Developing an Investment Portfolio
You can develop an investment portfolio from within any of the investment
modules, or from within the Investment Profile module.
About developing investment portfolios
Working from the Investment Details dialog box allows you to enter all of the
investments in all the portfolios without having to go to each module.
To enter investment information to a portfolio
1. Click the Investment Details button to open the dialog box. The Portfolio
selection drop-down menu enables you to enter all of the investments in
all of the portfolios, without having to go to each respective workbook.
2. When you access Investment Details from within an investment module,
you can choose to update that specific portfolio with the investment
details entered. Although you may have entered details for more than one
portfolio, only the active portfolio is automatically updated. Select the
Apply Investment Details to active module option. You can only
update all portfolios at once using the Export feature from within the
Investment Profile module.
To develop an investment portfolio
1. From the Data menu, and Client Information sub-menu, choose
Investment Details.
FP Solutions opens the Investment Details dialog box.
2. In the Portfolio field, select the investments in all of the portfolios
When you access investment details from within an investment module, you can
choose to update that specific portfolio with the investment details entered. Although
you may have entered details for more than one portfolio, only the active portfolio is
automatically updated. Choose Apply Investment Details to update the active
module. You can update all portfolios at once using the Export feature in Investment
Profile.
About adding investment information to a client file manually
You can enter investments manually by entering information in the fields on the
Investment Details dialog box. Investments entered manually are saved with the
client file, but not the database. To enter an investment in the database, use
Create on the Database tab.
To add investment information manually
1. Click New to enable the edit fields.
2. From the Portfolio field, select the portfolio the investment is to be
included in.
3. Enter the value as of January 1st of the current year, or the projected
value as of January 1st of the coming year, depending on the plan year
entered in the Personal Information user form.
4. Enter the name of the investment.
5. Select the category of the investment from the drop-down menu.
52
6. Enter Rank, MER, Standard Deviation, and Return values to appear on
the Ratings document if they are known, otherwise leave the fields blank.
7. Click Update to accept the investment.
FP Solutions adds the investment information to the client file.
8. To enter more investments, repeat steps 1-7.
To add database investment information to the client file
1. Click New to enable the edit fields.
2. From the Portfolio field, select the portfolio the investment is to be
included in.
3. Click the Database tab.
4. Highlight the desired investment in the database window and click
Transfer to Investment Details.
FP Solutions adds the investment information to the client file. All fields
with data available are populated.
5. Enter the value as of January 1st of the current year, or the projected
value as of January 1st of the coming year, depending on the plan year
entered in the Personal Information user form.
6. Click Update.
FP Solutions adds the investment to the portfolio.
To adjust the allocation of categories
You can only adjust the allocation of categories from the Assumptions dialog
box. You can also name five user-definable Other Investments from
Assumptions.
1. From the Data Menu, choose Assumptions.
2. Click Fund Return Detail and select an Investment category.
3. Click Edit and enter the name you wish to use for the category and the
desired allocation.
FP Solutions updates the allocation of categories.
Selecting Investments in a Logical Sequence
You can use the database and its filters to select investments from the data
base in a logical sequence. However, you do not have to select investments from
the database—you can also develop a portfolio entirely with custom entries to
be saved in that client file only.
About selecting investments in a logical sequence
Although you can select investments in any sequence you wish, you may find
that the quickest and easiest way to develop a portfolio is to select investments
in order of asset class. The filter in the database makes it easy to select
investments in a logical sequence.
53
To select investments in a logical sequence
1. From the Data menu, and Client Information sub-menu, choose
Investment Details.
FP Solutions opens the Investment Details dialog box.
2. Select a category from the Investment type drop-down menu.
3. Select Type from the Sort by drop-down menu. Choose any desired
secondary criteria from the Then by menu.
4. Click Refresh.
5. Choose all investments from that category, then select the next category.
6. Repeat steps 1-3 to select other investments.
; Note: The section on the right-hand side of the Investment Details tab is
provided for user feedback. The amounts invested in each portfolio are
displayed and updated as you proceed with your investment selections.
This is particularly helpful if you are developing several different
portfolios at the same time.
; Note: All investment data is saved whether you choose to immediately
update the portfolios or not. Also, the individual investments selected are
saved in the client file. Even if a selected investment is subsequently
removed from the database, it will still appear whenever you load that
client file.
Editing Investments in the Portfolio
At some point, you may need to change or delete an investment you have added
to the client portfolio.
To edit or delete an investment in the portfolio
1. From the Data menu, and Client Information sub-menu, choose
Investment Details.
FP Solutions opens the Investment Details dialog box.
2. On the Investment Details tab, use the scroll bar to find the investment
you wish to edit and highlight the investment.
3. To edit the investment information, click Edit, then either enter the
updated information in the fields, or click the Database tab and select
another investment to replace it with.
4. To delete the investment, click Delete.
FP Solutions updates the investment information.
What’s next?
You can present the summary of investment details to your client with the
Portfolio and Ratings documents. The Portfolio document summarizes the
portfolios with their specific investments, while the Ratings document includes
full details of each investment including Rank, MER, Standard Deviation, and
1, 3, 5, and 10 year historical returns when available.
54
Using Disclaimers
Because of the nature of the information provided on these documents, a
disclaimer appears at the bottom of each document. You can edit the
disclaimers to meet your needs.
1. From the Data menu, and Client Information sub-menu, choose
Investment Details.
FP Solutions opens the Investment Details dialog box.
2. On the Investment Details tab, click Disclaimer.
FP Solutions opens the disclaimer so you can edit it.
3. When you have completed the editing, click OK.
FP Solutions saves the changes to the disclaimer
; Note: You can choose not to include the disclaimers, however, if you are
using these documents to sell a recommended portfolio, the documents
are considered to be a sales communication and the Disclaimer should
be there.
Creating Custom Investments
As well as importing investment information from a database, you can also add
investments to the investment database manually.
About custom investments
You only enter custom investments into the database if you intend to use them
again. If you don't need them in your database you can simply enter them in
the client's portfolio, in which case they are saved with the client file, but not in
the database.
To add custom investments
1. From the Data menu, and Client Information sub-menu, choose
Investment Details.
FP Solutions opens the Investment Details dialog box.
2. On the Database tab, click Create.
FP Solutions opens the Create an Investment dialog box.
3. Enter the Company and Name of the investment to be added.
4. From the Type field, select the category it belongs to, to establish the
return allocation.
5. If you know the Rank, MER, Standard Deviation, and historical returns,
enter them in the edit fields. If the values are not known, leave the fields
blank and no values will be shown on the Ratings document for that
particular investment.
6. If you want the investment to be included in the database as a favourite,
check Marked as favourite.
7. Click Save to save the investment and return to the database.
55
Working with Investment Variables
As well as entering information with the Investment Variables dialog box, you
can also enter investment details on the Investment Profile Variables page as an
alternative to the user form.
To enter investment variables on the Investment Profile Variables
page
1. From the Goto menu, and Client Information sub-menu, choose
Investment Details.
FP Solutions opens the Investment Details dialog box.
2. Click the Variables tab at the bottom of the window.
3. Click on a cell in the Portfolio column to display the Portfolio selection
drop-down menu.
4. Select the portfolio, then enter the name of the investment in the next
field.
5. Enter the values, then scroll to the right to the Category column. Click
on a cell to display the Category selection drop-down menu. You can
enter investments for as many portfolios as you wish in any sequence.
See About investment categories below for more information.
6. Click Sort to arrange the investments by portfolio.
; Note: The changes you make are only applied to the current client file.
About investment categories
The Category drop-down menu offers the choice of the 33 standard mutual fund
categories as proposed by the Investment Funds Standards Committee. Also
included are 5 user-definable Other Investment categories. Each category is
allocated among the seven Asset Class categories according to the weightings
suggested in the committee's document "A Proposed Standard to Canadian
Mutual Fund Classification".
You can modify the default settings in the Return Allocation dialog box accessed
by clicking the Fund Return Details button on the Assumptions dialog box.
The Return Allocation of the five Other Investment categories is defaulted to
50% user-definable asset class 1, and 50% user-definable asset class 2. You
should set the desired allocation at the same time as you enter a name for the
category. The name you enter should be generic rather than investment specific
(e.g. Stocks, not Bell Canada), so that the category can be broadly used in all
portfolios. Also, you cannot repeatedly rename each Other Investment category
within a single client file.
Exporting Portfolios
You may wish to develop all portfolios at the same time. Although you can do so
from within any investment module, you can only update them all at the same
time from within Investment Profile, using the Export utility.
56
To export a portfolio
1. Once you have finished entering the investments for one or more
portfolios, click Export.
FP Solutions opens the Export to Investment Modules dialog box and
enables all of the portfolios detected to have been modified.
If a portfolio from an investment module not currently available in the file has been
modified, the procedure will open and add that module to the plan. This form also
points out errors, such as entering investments in the wrong portfolio, or forgetting a
portfolio entirely.
2. De-select any portfolio you do not want to update, and click OK.
FP Solutions updates all the portfolios.
57